Australia needs to find new iron ore export markets
Published: Jun 08, 2021 07:18 PM
Iron ore Photo:VCG

Iron ore Photo:VCG

Australia has good many reasons to diversify its iron ore exports, which totaled 600 million tons in 2020, as China's iron ore imports are likely to be halved by 2030 as the scrap steel recycling industry in China expands rapidly, said a top executive of a German scrap steel recycling company.

A significant decrease in China's imports of iron ore will be made possible by the development of the recycling of scrap steel, Rafael Suchan, CEO of Germany-based metal recycling company Scholz Recycling Group, told the Global Times on the sideline of a trade and investment symposium held in Ningbo, East China's Zhejiang Province.

China, the world's top importer of iron ore and largest steel producer, imported 1.17 billion tons of iron ore in 2020, customs data showed. In the same year, the country produced for the first time a record 1 billion tons of raw steel.

Of the 1 billion tons of crude steel now being produced in China, about 22 percent is based on recycled scrap steel, Suchan said. 

Under China's 14th Five-year Plan (2021-2025), the ratio is to be increased to 30 percent by 2025, which means that 330 million tons of recycled scrap steel will be used to produce steel, an increase of 50 percent from the current level, said Suchan. The recycling industry for scrap steel in China will double in the next 10 years.

"For every ton of steel that is based on scrap steel, you save 1.6 tons of iron ore," Suchan said. "By 2025, if China's plan to make steel from scrap goes as planned, the country will save 480 million tons of iron ore imports each year. By 2030, imports will decrease by 660 million tons annually."

Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global Times on Tuesday that the projection made by Suchan is "theoretically possible", considering the carbon neutrality goals of the Chinese steelmaking industry. 

By 2030, China's output of roughly 1 billion tons of crude steel will be produced using 400 million tons of scrap steel and 560 million tons of pig iron, Wang said. 

Chen Hong, a professor and director of the Australian Studies Center at the East China Normal University, told the Global Times on Tuesday that China's efforts to diversify its sources of iron ore and beef up the use of recycled steel could lead to drastic reduction of imports of Australian iron ore. 

If supplies from some African iron ore producing countries increase by 2030, imports of Australian iron ore could even be cut by more than half, said Chen.

Chen urged the Morrison administration to stop deluding people in Australia by creating an illusion that bilateral trade is not being hit by the fraught relations.

"When China cuts imports of Australian iron ore, the Australian economy could enter a 'wintry period'," he noted.

Economic and trade decoupling with any country is the last thing China wants to see, Chen said. 

However, Canberra's discriminatory policies against China and Chinese businesses, and some Australian politicians' and media outlets' outright threats to cut or stop iron ore exports to China, have sounded the alarm bell to Chinese decision-makers and businesses, Chen said.